SRA tells law firms not to use non-disclosure agreements to hide misconduct

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12 March 2018

Philip: No role for NDAs in cover-ups

Law firms must not use non-disclosure agreements (NDAs) to prevent the reporting of professional misconduct – including sexual harassment or misconduct towards other employees or clients – the Solicitors Regulation Authority (SRA) warned today.

A warning notice published today recognised that NDAs have a legitimate role in the commercial world but noted “widespread reporting of the perception that NDAs, alongside cultural issues within some firms, are resulting in low levels of reporting of inappropriate sexual behaviour”.

The SRA has received relatively few complaints about such behaviour – just 21 over the two years to 31 October 2017, but its action comes on the back of reports about City law firms using NDAs to cover up cases of sexual harassment.

The notice also warned against using NDAs as a means of improperly threatening litigation – such as a libel claim – or other adverse consequences, “or otherwise exerting inappropriate influence over people not to make disclosures which are protected by statute, or reportable to regulators or law enforcement agencies”.

It cautions too against using an NDA to influence the substance of a report, disclosure or co-operation, or preventing someone who has entered into an NDA from keeping or receiving a copy.

The SRA published two case studies, one involving a sexual harassment complaint, the other alleged sex discrimination and an out-of-court settlement. In both instances, the law firm would be expected to report the misconduct to the regulator.

Chief executive Paul Philip said: “The public and the profession expects solicitors to act with integrity and uphold the rule of law. And most do. NDAs have a valid use, but not for covering up serious misconduct and in some cases potential crimes.”

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